2001-06-06 sec-litreleases litigation_release 66 KB 4,124 chars

SEC v. Robert H. Shields; Marc David Levine; Gary Mariarossi; Michael Coyne; and 16 others not specified, No. LR-17028, Southern District of California (June 6, 2001) — Press Release

raw: Marc David Levine, et al.

Marc David Levine, et al., No. LR-17028 (June 6, 2001)

Caption: SEC v. Robert H. Shields, et al.

summary

Robert H. Shields and 19 others were indicted for wire, mail, securities fraud, and money laundering in a $50 million scheme that concealed 85% of investor funds were used for commissions and personal expenses, after the SEC had previously halted the operation in 1996, leading to civil penalties and disgorgement against Shields, Mariarossi, and Coyne, who later pleaded guilty and received probation and restitution.

paragraph

Robert H. Shields and 19 co-defendants were indicted for wire fraud, mail fraud, securities fraud, and money laundering in connection with a $50 million fraudulent telecommunications investment scheme. The defendants misled investors by falsely portraying a shell corporation as the managing partner and concealing that 85% of investor funds were diverted to pay sales commissions and personal expenses rather than legitimate business operations. The SEC had previously shut down the scheme in 1996, obtaining a court order that froze assets and halted seven boiler rooms, resulting in civil penalties and disgorgement orders against Shields ($782,416), Mariarossi ($273,597), and Coyne ($70,002); Mariarossi and Coyne later pleaded guilty and received five years’ probation and restitution of $456,995 and $70,000, respectively.

narrative

Robert H. Shields and 19 others were indicted in May 2001 for wire fraud, mail fraud, securities fraud, and money laundering in connection with a $50 million fraudulent telecommunications investment scheme. The defendants deceived investors by using false and misleading offering materials and concealing that 85% of investor funds were paid to a shell corporation they controlled, the Initial Managing Partner, for commissions, fees, and personal expenses rather than legitimate business use. The SEC had first intervened in October 1996, securing an emergency court order that shut down seven boiler rooms operating in Florida and Nevada, which had raised $16.5 million from hundreds of investors nationwide. In response to the SEC’s action, the court permanently enjoined Shields, Gary Mariarossi, and Michael Coyne from future securities violations and ordered them to pay civil penalties and disgorgement: Shields $782,416, Mariarossi $273,597, and Coyne $70,002. Prior to the 2001 criminal indictment, Mariarossi and Coyne entered plea agreements with the U.S. Attorney’s Office, receiving five years’ probation and restitution orders of $456,995 and $70,000, respectively. The indictment expanded the scope of accountability to all 20 defendants, tying the criminal charges directly to the same fraudulent offerings previously halted by the SEC. The case exemplifies a coordinated enforcement effort between civil and criminal authorities to dismantle a nationwide boiler room operation built on systemic deception and financial misappropriation.

Enriched metadata

Scheme: boiler-room (100%)
Court: Southern District of California
Outcome: sentenced
Disgorgement: $782,416
Restitution: $456,995
Civil penalty: $50,000
Entity: Marc David Levine

Classified boiler-room(confidence 100%). EDGAR detection: forms Form D· recall 50% / precision 4%. detection rule →

Extracted insights

Dollar amounts 8

$50.00M $50 million $10M–$100M
$16.50M $16.5 million $10M–$100M
$782K $782,416 $100K–$1M
$457K $456,995 $100K–$1M
$274K $273,597 $100K–$1M
$70K $70,002 $10K–$100K
$70K $70,000 $10K–$100K
$50K $50,000 $10K–$100K

Entities 8

scheme_term boiler rooms
court district court
scheme_term operation of seven boiler rooms soliciting investors nationwide
agency plea agreements with the usao
agency Securities and Exchange Commission
scheme_term shields and mariarossi oversaw the network of boiler rooms
agency usao
agency U.S. Attorney's Office For The Southern District Of New York

Triples 20

United States Attorney's Office unsealed indictment charging 20 individuals with wire fraud, mail fraud, securities fraud and money laundering
indictment charges Robert H. Shields and nineteen others with making false and deceptive promises and statements
indictment charges defendants with preparing false and misleading offering materials
investors purchased interests in a general partnership managed by a corporation controlled by the defendants
USAO charges defendants with deliberately failing to disclose their ownership of the Initial Managing Partner
SEC filed emergency action with the United States District Court for the Middle District of Florida
SEC sought temporary restraining order, preliminary injunction, asset freeze, and appointment of a receiver
court halted operation of seven boiler rooms soliciting investors nationwide
SEC alleged Shields and Mariarossi oversaw the network of boiler rooms
boiler rooms raised $16.5 million from hundreds of investors nationwide
SEC alleged Coyne was the interim manager of one of the startup companies
SEC alleged defendants fraudulently omitted to inform investors that 85 percent of funds were used for non-investment purposes
district court permanently enjoined Shields and Mariarossi from future violations of the securities registration and anti-fraud provisions
court ordered Shields to pay a $50,000 civil penalty and disgorgement in the amount of $782,416
court ordered Mariarossi to pay a $50,000 civil penalty and disgorgement in the amount of $273,597
district court permanently enjoined Coyne from future violations of the securities registration and anti-fraud provisions
court ordered Coyne to disgorge $70,002
Mariarossi and Coyne entered into plea agreements with the USAO
Mariarossi was sentenced to five years probation and ordered to pay restitution of $456,995
Coyne was sentenced to five years probation

View original SEC litigation releasesec.gov

Extracted body text (4,124c)

SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 17028 \ June 6, 2001 U.S. ATTORNEY INDICTS ROBERT H. SHIELDS AND NINETEEN OTHERS IN CONNECTION WITH FRAUDULENT INVESTMENT SCHEME HALTED BY SEC United States v. Marc David Levine, et al., Criminal Case No. 01 CR 1415 BTM The Securities and Exchange Commission ("SEC") announced that on May 23, 2001, the United States Attorney's Office for the Southern District of California ("USAO") unsealed an indictment charging 20 individuals with, among other crimes, wire fraud, mail fraud, securities fraud and money laundering in connection with a series of fraudulent telecommunications-related securities offerings grossing $50 million from investors. The indictment charges Robert H. Shields and nineteen others with making false and deceptive promises and statements and omitting material facts in connection with the fraudulent securities offerings. The indictment further charges the defendants with preparing false and misleading offering materials for use in soliciting investors. Through the fraudulent securities offerings, investors purchased interests in a general partnership that was to be managed by a corporation (the Initial Managing Partner) controlled by the defendants. The USAO charges in the indictment that the defendants deliberately failed to disclose, among other things, the fact of their ownership of the Initial Managing Partner and the fact that 85 percent of the investors' funds were paid to the Initial Managing Partner. On October 30, 1996, the SEC filed an emergency action with the United States District Court for the Middle District of Florida against Shields, Gary Mariarossi and Michael Coyne, among others, seeking a temporary restraining order, a preliminary injunction, an asset freeze, the appointment of a receiver, and other relief to halt the fraudulent offer and sale of securities through a network of boiler rooms operating in Florida and Nevada. In response to the SEC's action, the court halted the operation of seven boiler rooms that had been soliciting investors nationwide to invest in four of the fraudulent securities offerings referenced in the USAO's indictment. In its emergency action, the SEC alleged that Shields and Mariarossi oversaw the network of boiler rooms, and that the boiler rooms had raised $16.5 million from hundreds of investors nationwide through fraudulent offerings of securities issued by purported startup telecommunications companies. The SEC also alleged that Coyne was the interim manager of one of the startup companies. In addition, the SEC alleged that the defendants fraudulently omitted to inform investors that approximately 85 percent of the investors' funds were used for non-investment purposes, such as the payment of sales commissions, fees, and other costs associated with the offerings. On July 21, 1999, the district court permanently enjoined Shields and Mariarossi from future violations of the securities registration and anti-fraud provisions of the federal securities laws. In addition, the court ordered Shields to pay a $50,000 civil penalty and disgorgement in the amount of $782,416, representing his ill-gotten gains from the fraudulent scheme plus prejudgment interest. The court ordered Mariarossi to pay a $50,000 civil penalty and disgorgement in the amount of $273,597, representing his ill-gotten gains from the fraudulent scheme plus prejudgment interest. On June 30, 1999, the district court permanently enjoined Coyne, with his consent, from future violations of the securities registration and anti-fraud provisions of the federal securities laws. Coyne neither admitted nor denied the allegations in the SEC's complaint. The court also ordered Coyne to disgorge $70,002. Prior to the USAO's indictment, Mariarossi and Coyne entered into plea agreements with the USAO in related cases, and Mariarossi was sentenced to five years probation and ordered to pay restitution of $456,995. Coyne was sentenced to five years probation and ordered to pay restitution of $70,000. For additional information, see SEC Litigation Release No. 15219 (January 17, 1997).

OCR text (4,124c · plain-text · 99% conf)